DETROIT—EV, AV, EV. Ford Motor Co. has changed its mind twice about what kinds of vehicles will roll out of its plant in Flat Rock, Mich., within the next few years.
In late 2017, Ford predicted future demand for its commercial autonomous vehicles necessitated more room at the Flat Rock Assembly Plant than originally planned, so it shifted an upcoming electric crossover from that plant to Mexico to free up capacity.
Now the auto maker is reversing course, instead deciding that its battery-electric vehicles need a second North American plant, in addition to the one in central Mexico. It said last week that Flat Rock will make electric vehicles, while AV production moves elsewhere in southeast Michigan.
Ford's Flat Rock flip-flops illustrate the difficulty auto makers face gauging demand for unproven future technologies—and the speed at which those plans can change. Many are placing multibillion-dollar bets with scant evidence to go on, hoping consumers eventually overcome their fears of robot cars and that slow-selling EVs will finally take off.
"I think everyone needs some flexibility in terms of where they're going with all these future technologies," Michelle Krebs, executive analyst at Autotrader said. "While EVs aren't selling now, many believe sales will grow. And it's pretty clear that reality has set in (on AVs) that the runway is a lot longer than most people think."
Still, Ford has consistently said it plans to launch its autonomous vehicle in 2021 at scale for commercial delivery of groceries and other goods. Its Mexico-built battery-electric crossover, inspired by the Mustang, is expected next year.
"It's a better plan for how we allocate capital in a more efficient way," Joe Hinrichs, Ford's president of global operations said.
The auto maker did not disclose a location, investment figure or jobs estimate for its autonomous vehicle center. In a statement, Ford said the site will upfit purpose-built, commercial-grade hybrid vehicles with self-driving technology and unique interiors. A spokeswoman later said the site will be owned by Ford, not a supplier.
"As we ramp up AV production, this plan allows us to adjust our investment spending to accommodate the pace of growth of this exciting new technology," Hinrichs said. "This new plan combines our core strength in mass manufacturing with the agility and leanness we've shown with our modification centers for specialty manufacturing."
The Flat Rock moves represent a $900 million investment through 2023 that will result in 900 new jobs—figures Ford first announced in 2017. But now, instead of building AVs, those workers will be dedicated to EV production, as well as the next-generation Mustang.
The plant is scheduled to lose about 1,000 jobs when its second production shift ends this spring, with about half of the affected workers moving to nearby plants. The other half are temporary employees who aren't guaranteed another assignment. The investment will mean restoring the lost shift and a net increase of about 500 jobs in the area, though it's unclear when.
As part of the moves, Ford said production of the next-generation Transit Connect van would shift to Mexico from Spain. Ford had been expected to start North American production of the Transit Connect, with Flat Rock among the locations believed to be under consideration.
Ford's decision to build its next-generation Transit Connect in Mexico, after years of importing it from Spain and Turkey before that, allows the company to source more parts for the van from North American locations to meet requirements for the pending USMCA trade agreement.
Ford is involved in a court battle with the government over allegations that it was unfairly skirting the so-called chicken tax—a 25 percent tariff the U.S. has levied on light-truck imports since 1964—by bringing over Transit Connects that were built as passenger vehicles and then converting them to cargo vans stateside.
The third-generation Transit Connect, which analysts expect to go on sale in 2021, will be made in Hermosillo, Mexico, where production of the Fusion and Lincoln MKZ is slated to end at an undisclosed time.
"It wasn't so much about avoiding tariffs," Hinrichs said. "It was about improving the business."